MIS - Basic Information Concepts

Information can be defined as meaningfully interpreted data. If we give you a number 1-

212-290-4700, it does not make any sense on its own. It is just a raw data. However if we
say Tel: +1-212-290-4700, it starts making sense. It becomes a telephone number. If I gather
some more data and record it meaningfully like −
Address: 350 Fifth Avenue, 34th floor
New York, NY 10118-3299 USA
Tel: +1-212-290-4700
Fax: +1-212-736-1300
It becomes a very useful information - the address of New York office of Human Rights
Watch, a non-profit, non-governmental human rights organization.
So, from a system analyst's point of view, information is a sequence of symbols that can be
construed to a useful message.
An Information System is a system that gathers data and disseminates information with the
sole purpose of providing information to its users.
The main object of an information system is to provide information to its users. Information
systems vary according to the type of users who use the system.
A Management Information System is an information system that evaluates, analyzes, and
processes an organization's data to produce meaningful and useful information based on
which the management can take right decisions to ensure future growth of the organization.

Information Definition
According to Wikipedia −
"Information can be recorded as signs, or transmitted as signals. Information is any kind of
event that affects the state of a dynamic system that can interpret the information.
Conceptually, information is the message (utterance or expression) being conveyed.
Therefore, in a general sense, information is "Knowledge communicated or received,
concerning a particular fact or circumstance". Information cannot be predicted and resolves
uncertainty."

Information Vs Data
Data can be described as unprocessed facts and figures. Plain collected data as raw facts
cannot help in decision-making. However, data is the raw material that is organized,
structured, and interpreted to create useful information systems.
Data is defined as 'groups of non-random symbols in the form of text, images, voice
representing quantities, action and objects'.
Information is interpreted data; created from organized, structured, and processed data in a
particular context.
According to Davis and Olson −
"Information is a data that has been processed into a form that is meaningful to recipient and
is of real or perceived value in the current or the prospective action or decision of recipient."

Information, Knowledge and Business Intelligence

Professor Ray R. Larson of the School of Information at the University of California,
Berkeley, provides an Information Hierarchy, which is −
 Data − The raw material of information.
 Information − Data organized and presented by someone.
 Knowledge − Information read, heard, or seen, and understood.
 Wisdom − Distilled and integrated knowledge and understanding.
Scott Andrews' explains Information Continuum as follows −
 Data − A Fact or a piece of information, or a series thereof.
 Information − Knowledge discerned from data.
 Business Intelligence − Information Management pertaining to an organization's
policy or decision-making, particularly when tied to strategic or operational
objectives.

Information/Data Collection Techniques

The most popular data collection techniques include −
 Surveys − A questionnaires is prepared to collect the data from the field.
 Secondary data sources or archival data: Data is collected through old records,
magazines, company website etc.
 Objective measures or tests − An experimental test is conducted on the subject and
the data is collected.
 Interviews − Data is collected by the system analyst by following a rigid procedure
and collecting the answers to a set of pre-conceived questions through personal
interviews.
MIS - Classification of Information
Information can be classified in a number of ways and in this chapter, you will learn two of
the most important ways to classify information.

Classification by Characteristic
Based on Anthony's classification of Management, information used in business for
decision-making is generally categorized into three types −
 Strategic Information − Strategic information is concerned with long term policy
decisions that defines the objectives of a business and checks how well these
objectives are met. For example, acquiring a new plant, a new product,
diversification of business etc, comes under strategic information.
 Tactical Information − Tactical information is concerned with the information
needed for exercising control over business resources, like budgeting, quality
control, service level, inventory level, productivity level etc.
 Operational Information − Operational information is concerned with
plant/business level information and is used to ensure proper conduction of specific
operational tasks as planned/intended. Various operator specific, machine specific
and shift specific jobs for quality control checks comes under this category.

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Classification by Application
In terms of applications, information can be categorized as −
 Planning Information − These are the information needed for establishing standard
norms and specifications in an organization. This information is used in strategic,
tactical, and operation planning of any activity. Examples of such information are
time standards, design standards.
 Control Information − This information is needed for establishing control over all
business activities through feedback mechanism. This information is used for
controlling attainment, nature and utilization of important processes in a system.
When such information reflects a deviation from the established standards, the
system should induce a decision or an action leading to control.
 Knowledge Information − Knowledge is defined as "information about
information". Knowledge information is acquired through experience and learning,
and collected from archival data and research studies.
 Organizational Information − Organizational information deals with an
organization's environment, culture in the light of its objectives. Karl Weick's
Organizational Information Theory emphasizes that an organization reduces its
equivocality or uncertainty by collecting, managing and using these information
prudently. This information is used by everybody in the organization; examples of
such information are employee and payroll information.
 Functional/Operational Information − This is operation specific information. For
example, daily schedules in a manufacturing plant that refers to the detailed
assignment of jobs to machines or machines to operators. In a service oriented
business, it would be the duty roster of various personnel. This information is mostly
internal to the organization.
 Database Information − Database information construes large quantities of
information that has multiple usage and application. Such information is stored,
retrieved and managed to create databases. For example, material specification or
supplier information is stored for multiple users.

MIS - Quality of Information

Information is a vital resource for the success of any organization. Future of an organization
lies in using and disseminating information wisely. Good quality information placed in right
context in right time tells us about opportunities and problems well in advance.
Good quality information − Quality is a value that would vary according to the users and
uses of the information.
According to Wang and Strong, following are the dimensions or elements of Information
Quality −
 Intrinsic − Accuracy, Objectivity, Believability, Reputation
 Contextual − Relevancy, Value-Added, Timeliness, Completeness, Amount of
information
  Representational − Interpretability, Format, Coherence, Compatibility
 Accessibility − Accessibility, Access security
Various authors propose various lists of metrics for assessing the quality of information. Let
us generate a list of the most essential characteristic features for information quality −
 Reliability − It should be verifiable and dependable.
 Timely − It must be current and it must reach the users well in time, so that important
decisions can be made in time.
 Relevant − It should be current and valid information and it should reduce
uncertainties.
 Accurate − It should be free of errors and mistakes, true, and not deceptive.
 Sufficient − It should be adequate in quantity, so that decisions can be made on its
basis.
 Unambiguous − It should be expressed in clear terms. In other words, in should be
comprehensive.
 Complete − It should meet all the needs in the current context.
 Unbiased − It should be impartial, free from any bias. In other words, it should have
integrity.
 Explicit − It should not need any further explanation.
 Comparable − It should be of uniform collection, analysis, content, and format.
 Reproducible − It could be used by documented methods on the same data set to
achieve a consistent result.

MIS - Information Need & Objective

Information processing beyond doubt is the dominant industry of the present century.
Following factors states few common factors that reflect on the needs and objectives of the
information processing −
 Increasing impact of information processing for organizational decision making.
 Dependency of services sector including banking, financial organization, health care,
entertainment, tourism and travel, education and numerous others on information.
 Changing employment scene world over, shifting base from manual agricultural to
machine-based manufacturing and other industry related jobs.
 Information revolution and the overall development scenario.
 Growth of IT industry and its strategic importance.
 Strong growth of information services fuelled by increasing competition and reduced
product life cycle.
  Need for sustainable development and quality life.
 Improvement in communication and transportation brought in by use of information
processing.
 Use of information processing in reduction of energy consumption, reduction in
pollution and a better ecological balance in future.
 Use of information processing in land record managements, legal delivery system,
educational institutions, natural resource planning, customer relation management
and so on.
In a nutshell −
 Information is needed to survive in the modern competitive world.
 Information is needed to create strong information systems and keep these systems up
to date.

Implications of Information in Business

Information processing has transformed our society in numerous ways. From a business
perspective, there has been a huge shift towards increasingly automated business processes
and communication. Access to information and capability of information processing has
helped in achieving greater efficiency in accounting and other business processes.
A complete business information system, accomplishes the following functionalities −
 Collection and storage of data.
 Transform these data into business information useful for decision making.
 Provide controls to safeguard data.
 Automate and streamline reporting.
The following list summarizes the five main uses of information by businesses and other
organizations −
 Planning − At the planning stage, information is the most important ingredient in
decision making. Information at planning stage includes that of business resources,
assets, liabilities, plants and machineries, properties, suppliers, customers,
competitors, market and market dynamics, fiscal policy changes of the Government,
emerging technologies, etc.
 Recording − Business processing these days involves recording information about
each transaction or event. This information collected, stored and updated regularly at
the operational level.
 Controlling − A business need to set up an information filter, so that only filtered
data is presented to the middle and top management. This ensures efficiency at the
operational level and effectiveness at the tactical and strategic level.
 Measuring − A business measures its performance metrics by collecting and
analyzing sales data, cost of manufacturing, and profit earned.
  Decision-making − MIS is primarily concerned with managerial decision-making,
theory of organizational behavior, and underlying human behavior in organizational
context. Decision-making information includes the socio-economic impact of
competition, globalization, democratization, and the effects of all these factors on an
organizational structure.
In short, this multi-dimensional information evolves from the following logical foundations
 Operations research and management science
 Theory of organizational behavior
 Computer science −
o Data and file structure
o Data theory design and implementation
o Computer networking
o Expert systems and artificial intelligence
 Information theory
Following factors arising as an outcome of information processing help speed up of business
events and achieves greater efficiency −
 Directly and immediate linkage to the system
 Faster communication of an order
 Electronic transfer of funds for faster payment
 Electronically solicited pricing (helps in determining the best price)

MIS Need for Information Systems

Managers make decisions. Decision-making generally takes a four-fold path −
 Understanding the need for decision or the opportunity,
 Preparing alternative course of actions,
 Evaluating all alternative course of actions,
 Deciding the right path for implementation.
MIS is an information system that provides information in the form of standardized reports
and displays for the managers. MIS is a broad class of information systems designed to
provide information needed for effective decision making.
Data and information created from an accounting information system and the reports
generated thereon are used to provide accurate, timely and relevant information needed for
effective decision making by managers.
Management information systems provide information to support management decision
making, with the following goals −
 Pre-specified and preplanned reporting to managers.
 Interactive and ad-hoc support for decision making.
 Critical information for top management.
MIS is of vital importance to any organization, because −
 It emphasizes on the management decision making, not only processing of data
generated by business operations.
 It emphasizes on the systems framework that should be used for organizing
information systems applications.

MIS - Major Enterprise Applications

Enterprise applications are specifically designed for the sole purpose of promoting the needs
and objectives of the organizations.
Enterprise applications provide business-oriented tools supporting electronic commerce,
enterprise communication and collaboration, and web-enabled business processes both
within a networked enterprise and with its customers and business partners.

Services Provided by Enterprise Applications

Some of the services provided by an enterprise application includes −

 Online shopping, billing and payment processing

 Interactive product catalogue
 Content management
 Customer relationship management
 Manufacturing and other business processes integration
 IT services management
 Enterprise resource management
 Human resource management
 Business intelligence management
 Business collaboration and security
 Form automation
Basically these applications intend to model the business processes, i.e., how the entire
organization works. These tools work by displaying, manipulating and storing large amounts
of data and automating the business processes with these data.
Most Commonly Used Enterprise Applications
Multitude of applications comes under the definition of Enterprise Applications. In this
section, let us briefly cover the following applications −
 Management information system (MIS)
 Enterprise Resource Planning (ERP)
 Customer Relationship Management (CRM)
 Decision Support System (DSS)
 Knowledge Management Systems (KMS)
 Content Management System (CMS)
 Executive Support System (ESS)
 Business Intelligence System (BIS)
 Enterprise Application Integration (EAI)
 Business Continuity Planning (BCP)
 Supply Chain Management (SCM)
To the managers, Management Information System is an implementation of the
organizational systems and procedures. To a programmer it is nothing but file structures and
file processing. However, it involves much more complexity.
The three components of MIS provide a more complete and focused definition,
where System suggests integration and holistic view, Information stands for processed
data, and Management is the ultimate user, the decision makers.
Management information system can thus be analyzed as follows −

Management
Management covers the planning, control, and administration of the operations of a concern.
The top management handles planning; the middle management concentrates on controlling;
and the lower management is concerned with actual administration.

Information
Information, in MIS, means the processed data that helps the management in planning,
controlling and operations. Data means all the facts arising out of the operations of the
concern. Data is processed i.e. recorded, summarized, compared and finally presented to the
management in the form of MIS report.

System
Data is processed into information with the help of a system. A system is made up of inputs,
processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.

Definition
Management Information System or 'MIS' is a planned system of collecting, storing, and
disseminating data in the form of information needed to carry out the functions of
management.

Objectives of MIS
The goals of an MIS are to implement the organizational structure and dynamics of the
enterprise for the purpose of managing the organization in a better way and capturing the
potential of the information system for competitive advantage.
Following are the basic objectives of an MIS −
 Capturing Data − Capturing contextual data, or operational information that will
contribute in decision making from various internal and external sources of
organization.
 Processing Data − The captured data is processed into information needed for
planning, organizing, coordinating, directing and controlling functionalities at
strategic, tactical and operational level. Processing data means −
o making calculations with the data
o sorting data
o classifying data and
o summarizing data
 Information Storage − Information or processed data need to be stored for future
use.
 Information Retrieval − The system should be able to retrieve this information from
the storage as and when required by various users.
 Information Propagation − Information or the finished product of the MIS should
be circulated to its users periodically using the organizational network.

Characteristics of MIS
Following are the characteristics of an MIS −
 It should be based on a long-term planning.
 It should provide a holistic view of the dynamics and the structure of the
organization.
 It should work as a complete and comprehensive system covering all interconnecting
sub-systems within the organization.
  It should be planned in a top-down way, as the decision makers or the management
should actively take part and provide clear direction at the development stage of the
MIS.
 It should be based on need of strategic, operational and tactical information of
managers of an organization.
 It should also take care of exceptional situations by reporting such situations.
 It should be able to make forecasts and estimates, and generate advanced information,
thus providing a competitive advantage. Decision makers can take actions on the
basis of such predictions.
 It should create linkage between all sub-systems within the organization, so that the
decision makers can take the right decision based on an integrated view.
 It should allow easy flow of information through various sub-systems, thus avoiding
redundancy and duplicity of data. It should simplify the operations with as much
practicability as possible.
 Although the MIS is an integrated, complete system, it should be made in such a
flexible way that it could be easily split into smaller sub-systems as and when
required.
 A central database is the backbone of a well-built MIS.

Characteristics of Computerized MIS

Following are the characteristics of a well-designed computerized MIS −
 It should be able to process data accurately and with high speed, using various
techniques like operations research, simulation, heuristics, etc.
 It should be able to collect, organize, manipulate, and update large amount of raw
data of both related and unrelated nature, coming from various internal and external
sources at different periods of time.
 It should provide real time information on ongoing events without any delay.
 It should support various output formats and follow latest rules and regulations in
practice.
 It should provide organized and relevant information for all levels of management:
strategic, operational, and tactical.
 It should aim at extreme flexibility in data storage and retrieval.

Nature and Scope of MIS

The following diagram shows the nature and scope of MIS −